Scholarly Works (26 results)

Climate change mitigation requires reduction in emissions of greenhouse gases rather than mere reduction in emission intensity of the economy. Regulations such as the Kyoto Protocol, Emission Trading Scheme, and the Regional Greenhouse Gas Initiative establish an emissions target as opposed to an emission intensity target. The policies implemented till date have also largely targeted emission reduction from power plants and the industries. Recent regulations aimed at controlling greenhouse gas emissions from transportation mandate intensity target for fuels. In this paper we compare abatement cost and output under two types of regulations of transportation fuels, namely, emission intensity standard and emission quota. We do this in the context of a price-taking region, and we focus on the shortrun. We �nd that under an intensity standard pollution abatement cost is higher than or equal at best to that under an emission quota, while aggregate output can be higher or lower than under a quota.

One popular policy option to address environmental and economic concerns arising from current patterns of energy use is to subsidize increase in energy efficiency or renewable energy. In this paper we evaluate the lifecycle environmental bene�ts of the Car Allowance Rebate System (CARS) (or commonly `Cash-for-clunkers') which provided a subsidy for voluntary early retirement and replacement of low fuel economy automobiles with new, higher fuel economy vehicles. We �nd that the estimates of bene�ts hinge crucially on the assumption about what type of vehicle would have been purchased in the counterfactual scenario. Estimates are signi�cantly less sensitive to assumptions about the remaining useful life of vehicles traded-in and the rebound e�ect. Our prediction is that CARS program lead to a reduction of 9.1 to 17.8 million metric tonnes in greenhouse gas (GHG) emissions and 850 to 1600 million gallon reduction in gasoline use over a 13 year period. The average subsidy per tonne of avoided GHG lies between $142 and $278. Disaggregation of bene�ts based on the fuel economy of the clunker reveals opportunities for better aligning incentives and program bene�ts in future

Predicting global land use change (LUC) due to biofuel expansion and predicting greenhouse gas emissions attributable to LUC are both complex. This paper has the simpler objective of describing what the weight of historical experience in maize production during the past �ve decades in the US suggests about how much gross agricultural acreage may need to expand to accommodate higher crop demand and how this compares with predictions in the literature on LUC due to biofuels. We disaggregate historical change in crop production in the US into intensive and extensive margin e�ects and use the latter to predict a range for LUC due to US maize ethanol mandates. Analysis of historical data suggests that while for brief periods (2 or 3 years) acreage expansion could occur at the high rates predicted by several studies, in the long-run net expansion is likely to be smaller than such predictions.

Lifecycle Analysis (LCA) has become an important tool for guiding regional or national policy actions to address global environmental problems such as climate change. LCA-based indicators of greenhouse gas (GHG) intensity of di�erent fuels are being used to design long-term policies supporting renewable and alternative energy technologies. However, some of these technologies risk proving counter-productive to policy goals. An example is the debate about the environmental bene�ts of biofuels. Using biofuels as an illustrative example, we identify the structural reasons for the di�erences between two strands of literature on environmental bene�ts of alternative energy, namely, lifecycle analysis and economic market-equilibrium analysis. We explain why a policy planner cannot assume the potential environmental gains as revealed by a comparison between two LCAs as given while selecting policies to capture those gains. In other words lifecycle indicators are endogenous variables in the policy-selection problem. A capacity to compute lifecycle indicators as a function of economic variables and policy parameters can help policy planners better compare the implications of di�erent policy actions.

Governments throughout the world have enacted policies to support the introduction of alter- natives to crude oil. These policies are viewed as means to achieve multiple objectives such as energy independence and security, reduce greenhouse gas (GHG) emissions, protect fuel con- sumers and support infant industries. We evaluate the trade-o�s presented by di�erent policy instruments such as renewable fuel (biofuel) standards (RFS), fuel GHG intensity standards (FGIS) and fuel GHG tax in achieving these objectives. Using a two-region partial-equilibrium model, we �nd that the relative performance of the two policies, RFS and FGIS, relative to each other and relative to a fuel tax, depends on whether the policy is global or regional in scope. Whereas the FGIS has better environmental performance than RFS when applied globally, the two policies lead to similar environmental outcomes when the policy is regional. RFS leads to bigger marker share for non-crude oil fuels than both FGIS and fuel tax.

regions are also riding on the same hope for reducing emissions from transportation. The main advantage of biofuels is that they are technically mature, cheaper to produce and more convenient to use relative to other alternative fuels. However, the impact of current biofuels on the environment and on economic welfare, is controversial. In my dissertation I focus on three topics relevant to future energy and climate policies. The first is the economics of lifecycle analysis and its application to the assessment of environmental impact of biofuel policies. The potential of biofuel for reducing greenhouse gas emissions was brought to the fore by research that relied on the methodology called lifecycle analysis (LCA). Subsequent research however showed that the traditional LCA fails to account for market-mediated effects that will arise when biofuel technologies are scaled up. These effects can increase or decrease emissions at each stage of the lifecycle. I discuss how the LCA will dier depending on the scale, a single rm versus a region and why LCA of the future should be distinguished from LCA of the past. I describe some approaches for extending the LCA methodology so that it can be applied under these dierent situations. The second topic is the economic impact of biofuels. Biofuels reduce the demand for oil and increase the demand for agricultural goods. To high income countries which tend to be both large importers of oil and large exporters of agricultural goods, this implies two major benefits. One of the one hand it reduces the market power of OPEC (Oil Producing and Exporting Countries), a cartel of nations which is the single largest oil exporting entity in the world, and is an entity considered unreliable. On the other hand, it reduces the demand for domestic farm subsidies. At the same crops comprise a small share of the retail price of food. As a result, the expected negative impact of biofuel was at worst a small increase in the retail price of food. However, the food price in inflation in the year 2008 suggests that the negative impact on food consumers was significantly higher than

expected and also outweighed the impact fuel consumers. I estimate the eect on biofuels on food and oil prices and compare them to other estimates in the literature and also relate these to prices observed in the real world. The third topic is the economics of greenhouse gas regulations of transportation fuels. Climate change policies such as United Nations' Kyoto protocol, European Union Emission Trading Scheme, and the Regional Greenhouse Gas Initiative in the US north-east mandate an aggregate emission target, called a cap and allow regulated entities to trade responsibilities for abatement. Furthermore, these policies have generally and sometimes exclusively targeted the electricity and industrial sector for emission reduction. However, the Low carbon fuel standard and Renewable

fuel standard are two policies about to be implemented by the State of California and the US federal government, which exclusively target the transportation sector for emission reduction. Furthermore, these regulations mandate emission intensity target for fuels rather than aggregate emission reduction. I compare the cost-eeffectiveness of these two types of regulations, namely, aggregate emission caps versus emission intensity standards and discuss how prices, output and emissions vary between these two types of policies.